But its chief executive, David Lamp, said the government’s role in funding renewable diesel made it an inherently unstable business. Federal and state incentives could encourage the industry to produce more fuel than needed. On the other hand, he’s worried that Congress or California will abruptly remove the taking of the incentives.
“Take one of those grants and you’re at break-even point,” Lamp said. “Given the federal government’s deficit position, some of these things are going to have to be looked at very carefully.
Another concern is that as more refineries enter this business, it may become more difficult for them to find enough cooking fat and animal fat.
“The real limit of renewable diesel is the availability of the feedstock,” said Kurt Barrow, vice president of energy research and consultancy IHS Markit.
But Jeremy Baines, chairman of Neste US, the US unit of a Finnish energy company, is more optimistic. He expects large companies such as Amazon, Walmart and UPS to increase their fuel use to reduce carbon emissions from their truck fleets.
“Even if you want to go 100% electric, renewable diesel is the only deployable and scalable thing today,” he said.
Neste Oyj supplies its two largest markets, Europe and North America, from refineries in Singapore, the Netherlands and Finland, and is looking to find or build another plant in the United States. The company collects the fat from tens of thousands of restaurants around the world, including the United States, and then mixes it with waste from around the world at its refineries. Once transformed into renewable diesel, the fuel is sent around the world, including California and Oregon. One of its customers is Oakland, which uses fuel from urban vehicles.